New inflation figures released show that rates remained unchanged last month, despite expectations they would drop.
The Office for National Statistics said Consumer Prices Index inflation (CPI) remained at 8.7 per cent in May - the same rate it was at in April. The ONS said rising prices for plane tickets, recreational, and cultural goods and services alongside second-hand cars contributed to the most to inflation.
Meanwhile, motor fuel costs placed the biggest downward pressure on inflation, the ONS said. The unchanged rate means the Bank of England may be more pressured to raise interest rates even further this month.
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ONS chief economist Grant Fitzner said: “After last month’s fall, annual inflation was little changed in May and remains at a historically high level. The cost of air fares rose by more than a year ago and is at a higher level than usual for May.
“Rising prices for second-hand cars, live music events and computer games also contributed to inflation remaining high. These were offset by a fall in the cost of petrol.
“Food price inflation remains high, but the rate has eased slightly this month with costs rising more slowly than this time last year.”
The Bank of England has frequently signified it wants to keep inflation as close to 2 per cent and may drive up interest rates again in an attempt to drive it down. However, this will result in increased pressure for mortgage-holders who are already facing rates close to 15-year highs.
Liberal Democrat Treasury spokeswoman Sarah Olney said: “These worse-than-expected figures show the Government is failing miserably to bring inflation down and provide relief for struggling families facing soaring bills. Home-owners now face the likelihood of even more interest rate hikes adding to their monthly mortgage payments, all while the Chancellor just sits on his hands.”
Chancellor Jeremy Hunt said: “We know how much high inflation hurts families and businesses across the country, and our plan to halve the rate this year is the best way we can keep costs and interest rates down. We will not hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy, while also providing targeted support with the cost of living.”
